A detailed analytical survey that sought to gauge Britainís economic performance in the first quarter of this year has estimated that GDP grew by 0.7% in the three months to April, equalling the countries performance from the quarter before.
The Markit/CIPS Purchasing Managersí Index released the forecast earlier today, and utilised a multitude of manufacturing, service sector performance and construction data in order to determine the 0.7% value.
And whilst each areaís productivity grew in the months up to April, the rate in which this growth occurred was shown to have slowed in March, with the rate of expansion in servicing areas at its lowest point in almost a year, whilst business confidence levels also fell as well.
Despite the recent slowdown, Market head economist, Chris Williamson, argued that recent activity measurements taken during this week indicate that growth is still ëvery strongí, and pointed to the fact that input prices have consistently fallen as evidence that the prognosis remains positive on the countryís economic recovery.
He added: “The drop in price pressures, alongside the more moderate pace of growth, takes pressure off the Bank of England to start tightening policy, which should in turn take some pressure off sterling.”
The recent increase in the value of the pound has also been identified as a cause for concern for manufacturers and the government in the UK who are seeking to raise their levels of exports in a bid to make the economic recovery more ësustainableí and less based on consumer spending.
Another key area that is viewed as being pivotal to securing the UKís long term economic future is picking up business lending levels, which have declined steeply since the recession due to bank apprehension of distributing credit to unreliable borrowers.
However, a report released by the Bank of England today has illustrated that creditors expect the level of business loan approvals and distributions to rise monumentally in the second quarter of this year, as policymakers move to their new programme of balancing the economy and picking up figures in the vital area of labour productivity.
Itís quarterly Credit Conditions Survey said: “The expansion of availability was reported to be driven by an improvement in the economic outlook and increased appetites for risk on the part of lenders.”
In recent times, banks across the country have come under huge scrutiny for their conservatism when dealing with loan applications from small and medium businesses, with the resulting effect being that a number of promising companies have been denied access to the finance they require to expand their staff base, improve productivity and export greater amounts.
Whilst they have defended their conduct by identifying that demand from businesses has been relatively low, politicians and policymakers have contested this by citing that they have continued to be measly with their distribution of loans, despite the fact that they have been given cheap access to finance in order to give businesses greater access to finance.
Earlier this year, the Public Accounts Committee of MPís argued that total lending by banks since the Bank of England launched its Funding for Lending Scheme had actually fallen by £2.3 billion, despite the fact that the scheme was launched to incur the opposite effect and bolster business lending levels by giving lenders cheap access to finance.
The reality of the situation is that with the government achieving its initial aim of adding gloss to its growth figures through the encouragement of consumer spending, the hard work now needs to be done in order to add legitimacy to the countryís economic recovery, and this can only be done by improving export levels and picking up labour productivity.
If the country can address these areas, and the Bank of Englandís forecasts toward business lending manifest in reality, then a far more positive prognosis for the countryís economy could be realised by the end of the year, as business expansion would improve labour productivity, organically bolster consumer spending power, and perhaps address the endemic issue of stagnant wage rises that has marred the countryís economic recovery in the past few years.